“That is the height of irresponsibility,” Mr. Obama said sharply, referring to the bonuses. “It is shameful.” Wall Street, he said, was coming to the government for badly needed help — which taxpayers were providing because otherwise “the entire system could come down on top of our heads” — and the government had a right to expect in return that Wall Street would “show some restraint and show some discipline and show some sense of responsibility.” After going on in this vein for a while, he slapped around Citigroup for agreeing to take that new $50 million corporate jet after agreeing to a huge bailout in November. The government’s demand that the plane be canceled should have been unnecessary “because they should know better,” he scolded.
Mr. Obama didn’t take a shot at John Thain, the former chief executive of Merrill Lynch, who was pushed out last week by his new boss, Ken Lewis, at Bank of America, after Merrill reported a $15.3 billion loss in the fourth quarter. But then, he didn’t have to. The revelation that Mr. Thain had spent $1.2 million remodeling his office shortly after joining Merrill in 2007 — and more recently allotted big bonuses to Merrill’s troops even as the firm’s red ink was forcing Bank of America to seek more government help — has transformed Mr. Thain into the new Richard Fuld. He’s the person Americans would most like to punch in the nose.
This week, American companies announced somewhere around 65,000 layoffs. Caterpillar, Kodak, Home Depot, I.B.M., even mighty Microsoft: they are all cutting jobs. Everywhere in the United States, people are feeling the pain of this deepening recession. Even those with jobs worry about their futures. Their 401(k) plans have been decimated. They are frightened and angry.
Which is why Wall Street should not be surprised that oversize bonuses and $50 million jets generate outrage — and tough rejoinders from the president. “It suggests the selfishness of people on Wall Street,” said Charles Elson, a corporate governance expert at the University of Delaware, who sounded pretty outraged himself. “Wall Street has yet to learn the lesson of what happened.” What happened, put simply, is that the people who thought of themselves as the smartest guys in the room — and were paid accordingly — weren’t so smart after all. They brought down the financial system. They lost so much money that only the government can save them. The scolding they got from the president this week suggests that they’re going to be paying a price — richly deserved, I might add — for a good long time.